Despite higher disposable incomes and this year’s price cuts, almost four million UK homes are now in debt to their energy supplier – 260,000 more than last year
Customers collectively owe energy providers £507 million – up 9% from £464 million in 2014
Average debt per household has risen to £130, up from £128 last year
Almost a third (30%) of households in debt admit they now owe their supplier more than they did a year ago
The new figures come just a week after reports that 97,000 gas and electricity pre-payment meters were forcibly installed in homes last year due to customer debt
Uswitch.com is calling on suppliers to make energy more affordable by passing on double-digit standard tariff price cuts to reflect the drop in wholesale energy costs.
Despite higher disposable incomes, lower inflation and energy price cuts, the number of homes in debt to their energy supplier has soared to almost four million – 260,000 more than last year – according to a new survey from Uswitch.com, the price comparison and switching service. The research also reveals that the average debt per household has risen to £130, up from £128 last year, meaning consumers now collectively owe energy providers an eye-watering £507 million – £43 million more than in 2014.
According to the new data, almost a third (30%) of households in debt admit that they owe their supplier more now than they did a year ago. Higher levels of debt are likely, in part, to be from increased energy consumption following this year’s cold winter. Nevertheless, despite over half (54%) of energy consumers rationing their energy use to keep bills down, an increase in disposable incomes and recent price cuts to the cost of standard tariffs, debt has soared.
This year’s price cuts led to average reductions to big six standard dual fuel tariffs of just 2.2% or £28 a year, leaving the average annual bill at a staggering £1,237. Despite the modest reductions, 4.5 million households are still classed as ‘fuel vulnerable’, spending more than £1 in £10 of their income on energy. To help more consumers struggling with their energy bills, Uswitch.com is repeating calls for suppliers to make double-digit tariff price cuts – better reflecting the 25% reduction in wholesale gas and 18% cut in wholesale electricity costs in the 12 month period to winter 2015/16.
With the number of households in debt rising, a worrying third (30%) of consumers choose to turn a blind eye, hoping it will go down over time, while just one in five (19%) say they are able to pay it off in one lump sum.
Ann Robinson, Director of Consumer Policy at Uswitch.com, says: “Pre-payment meters were forcibly installed in almost 100,000 homes last year due to debt, yet our figures suggest this could be just the tip of the iceberg. This is evidence that energy has become totally unaffordable for millions of homes. Disposable incomes may be on the up, but people are still under relentless pressure just to cover the cost of essential bills.
“Not only are more households in the red to their energy supplier, but the amount they owe has gone up, despite the recent price cuts. Energy suppliers must urgently pass on double-digit reductions to their customers – many of whom have admitted to going cold this winter in an attempt to keep their bills down.
“Consumers can take control of their energy use by making sure their home is as energy efficient as possible and checking that they’re on the most competitive tariff. It’s also important to provide regular meter readings to your supplier, as relying on estimated bills can be a shortcut to debt. Anyone who is concerned about their ability to pay should contact their supplier, or a debt charity, sooner rather than later to discuss their options.”
Research was conducted online by Opinium between 1st May and 5th May 2015, among 2,002 UK adults. All responses were from those who were responsible for paying the energy bill. Research was conducted online by YouGov Plc on behalf of Uswitch.com. Fieldwork took place 3rd to 6th February 2014, amongst 2,138 adults with decision making involvement with energy suppliers. Data is weighted to be representative of GB adults. * Research carried out online with the Uswitch.com Consumer Opinion Panel in March 2015 amongst a sample of 1,000 GB adults.
When asked ‘Thinking about your most recent energy bill from your supplier which of the following best applies to you? 15% of respondents responsible for paying energy bills, either individually or jointly with someone else referred to ‘in debt/arrears’. 26 million households in the UK. 15% of 26 million = 3.9 million. The mean amount of those in debt was £130. £130 x 3.9 million = £507 million. **When asked: ‘Thinking about your most recent energy bill from your supplier, which of the following best applies to you?’ 14% of respondents answered that they were in debt. 14% of 26 million is 3,640,000 households. 3.9 million – 3,640,000 = 260,000. The mean amount of those in debt in 2014 was £127.52 x 3,640,000 = £464million. *£507million - **£464million = £43million
*When asked ‘Thinking about the amount you are in debt/arrears with your energy supplier, how does this compare with a year ago?’ 30% answered my debt / arrears is higher
***In response to ‘Have you gone cold at home this winter due to the cost of energy?’ 54% answered yes
*When asked ‘Thinking about the amount you are in debt/arrears with your energy supplier, how are you going to pay it off?,19% by lump sum, 30% I’m hoping it will go down naturally over time
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